Disaster in Japan affects Iowa exports
March 27, 2011
The disaster situation in Japan has hindered the country economically. Japan has the third-largest economy behind the United States and the People’s Republic of China, but the earthquake and tsunami have changed the usual behavior of Japan’s economy.
“It’s going to change how their economy is producing goods and services in general,” said David Swenson, associate scientist of economics. “The economy is going to have to redirect its investment to rebuilding, which will need public and private resources that otherwise would be geared to export sales and have to be redirected to domestic needs.”
Japan is the world’s largest importer of corn. Iowa provides Japan with many types of goods including corn.
“We supply Japan with pork, beef, poultry products, corn and soy meal,” said Jacinto Fabiosa, scientist for the Center for Agriculture and Rural Development.
Japan’s demand for those exports will possibly decrease.
“It will result in lower demand by them because much of Japan’s resources are being made rebuilding those resources that aren’t available,” Swenson said. “Their demands for imported goods that they don’t produce in their own country will go down.”
Consumption of exported products in Japan will decrease.
“Income will be down and stay down for perhaps a very long time,” Swenson said.
Japan’s economy will rely on basic foods and needs.
It’s possible that the disaster may give Japanese citizens no other choice but to rely on imported goods.
“There will be a food safety issue,” Fabiosa said. “It’s very likely Japanese consumers’ preferences will shift from domestic products to imported products. If the Japanese consumers would be concerned about the food safety, that might shift their food needs away from domestic to imported.”
The possible radiation from the nuclear meltdown caused by the natural disaster may push Japanese consumers away from domestic products.
“In the short run it might create a demand for imported food because their domestic supply is compromised,” Fabiosa said. “In the long run it will depend on how the Japanese economy will recover; it might slow down the demand on imported food.”
Food safety will play a part in whether or not consumers in Japan will rely more or less on imported products.
“Japanese citizens are very concerned about food safety because they are high-income consumers,” Fabiosa said.